Attorney says Brace appreciates support of family and friends

Mon, 10/06/2014 - 7:00pm

Lynda Clancy

In downtown Camden Monday, Oct. 6, receptacles and sides of buildings were tagged with the understated yet understood.

ROCKLAND — Current KAX Center, Inc., owner Tamara Swasey-Ballou, has filed a civil complaint in Knox County District Court declaring a breach of contract with the business’ former owner, Russell Brace, and is asking for $75,000 in compensation. The suit was filed the same day, Oct. 3, as United Mid-Coast Charities submitted its own civil suit against Brace in the same courthouse.

Established in 1987, KAX offers bookkeeping, data management and other small business services in downtown Camden. In July, Swasey-Ballou bought the business, its assets, goodwill and client list from Brace at a $60,000 purchase price.

With the recent news that Brace has allegedly misappropriated $3.8 million of donations made to United Mid-Coast Charities (see Camden’s UMCC files suit against Rusty Brace, wants $3.8 million returned), also based in Camden, Swasey-Ballou maintains that Brace made “fraudulent misrepresentations to her concerning the nature of goodwill associated with KAX, and the likelihood that UMCC would remain a client of KAX,” according to the Oct. 3 suit.

United Mid-Coast Charities attorney Jay McCloskey is attempting to place liens on assets owned by Rusty Brace. According to municipal tax records, those assets include:

The Brace Building, 21 Elm Street, Camden, assessed by the town at $1.7 million

House, 39 Spruce Street, Rockport,assessed at $774,800

House, Washington, 69 Steele Lane, assessed at $314,954

House, Rangeley. Assessed value unknown.

”Specifically, Brace failed to disclose that he was embezzling substantial funds from UMCC, and had been using KAX in connection with his fraudulent scheme,” the suit said.

In her affidavit that is filed with the case, Swasey-Ballou said that at the time of the sale of KAX to her, “UMCC was a major client of KAX, providing revenue of approximately $50,000 each year to the company.”

She said she would not have purchased KAX if she had known that it was being “used as a cover and instrument to perpetrate substantial crimes and frauds against UMCC,” the suit said.

Attorney Chris McLean, of Camden, filed the complaint on her behalf. (See attached PDF to read the suit in entirety)

According to the Swasey-Ballou suit, she has suffered damages of $40,000, plus more expenses associated with the start-up, advertising and loan costs.

Those costs, in addition to incidental and consequential damages, including paying monthly rent to Brace for space at the Brace Building, add up to $75,000.

On Monday, Oct. 6, the attorney for Brace said that in light of the number of serious situations — the “outstanding matters and potential criminal investigation” — it would be inappropriate to comment. Peter DeTroy, of the Portland-based Norman, Hanson and DeTroy firm, said Brace and his wife, Becky, appreciate the support of family and friends.

Also on Monday, UMCC attorney Jay McCloskey was attempting to place liens on assets owned by Rusty Brace.

And, the FBI continues its investigation of the Brace allegations, “pawing through bank records,” said UMCC spokesman Dennis Bailey, who has been retained by the nonprofit to negotiate the organization’s way through media interest.

Bailey said other banks would likely be called, to survey if other accounts exist.

There is also the question of whether the First N.A., has insurance to cover the cost of the donation checks totaling $3.8 million that Brace was allegedly depositing there. In its Oct. 3 lawsuit against Brace, UMCC contends that he initialed checks that were intended for UMCC for eventual distribution to local nonprofits helping the needy, but instead deposited them into his Brace Management account at the First.

The suit also alleges that beginning in Dec. 2001, and continuing through 2014, Brace “stole and converted money belong to UMCC by wrongfully taking donation checks made payable to UMCC and then using deposit stamps bearing the names of multiple depositors, including the Brace Management Group – to ‘endorse’ and deposit these donation checks into his Brace Management Group account at The First.”

A call to Daniel Daigneault, president of First N.A., has yet to be returned.

UMCC President Steve Crane comments

On Oct. 6, Crane said the UMCC would continue to do business with KAX, under the new ownership of Swasey-Ballou.

Crane said he had optimism for the future of UMCC and its “real mission to support agencies in Knox and Waldo counties who help those who are need.”

Crane, a former president of the Camden-based Allen Agency, said he has volunteered with UMCC for 12 years.

“If we get the money back, it will go out to the community,” he said. “That’s why it [UMCC] exists.”

Crane said the UMCC board of directors, volunteers who number at 43, convened an emergency meeting recently, with “good attendance” by all who were in the state. They sent out a letter to the 1,100 to 1,200 donors who have given to UMCC explaining briefly the action against Brace.

Crane declined to comment on whether the directors carried officer insurance (known as a D&O policy). Such insurance is advised for those who serve on nonprofit boards, in case of lawsuits alleging fraud or financial mismanagement.

When asked if UMCC will remain intact, Crane said, “Absolutely.”

When asked if UMCC will continue with its fundraising, Crane said, “Absolutely.”

He said the nonprofit will begin its late fall appeal as scheduled.

“Hopefully, by then we can explain to the donor base a lot of things,” he said.

The organization did cancel its annual Holiday Pops concert at Christmas this year, said Crane.

“We’re not going to cancel for next year,” he said.

Crane said UMCC is a small organization reliant on volunteers, and its bookkeeping is fine. The board has a treasurer, and is kept informed by a quarterly report that outlines expenses and revenues.

“I think the organization has done a tremendous amount of good,” he said. “We had a horrible experience with someone we trusted who stole a lot of money. But we will come out stronger and more transparent, and do it better than ever.”

He said the support that has arrived via email and conversations has been tremendous.

“There are a lot of good people in this community,” said Crane. “Part of me is hurt. The board is hurt. The donors are hurt. You have to go forward. We have been brutalized.”

Crane said UMCC will have more involvement with the community, adding that it is time for the “new 21st Century UMCC.”

Throughout Camden, during the day Monday, comments from citizens on the street about the UMCC chain of events has been overwhelmingly qualified as “sad.”